When 403(b) plan participants have assets held by former
service providers, it can pose major administrative and compliance problems for
plan sponsors—problems that could eventually lead to action from federal
regulators. The strategy combines the service delivery of The Principal,
including education and transition services, with legacy asset expertise from
NBS—a third-party administrator (TPA), experienced in meeting the
administrative and compliance demands of plans with legacy assets.

“Plan sponsors often try to solve the legacy asset dilemma
by encouraging participants to transfer assets from the prior service provider
to the current service provider. But frequently, all assets are not
transferred,” says Aaron Friedman, tax-exempt national practice leader, at The
Principal. “These plan sponsors need a strategy to help ensure they can fulfill
their entire plan administrative and compliance responsibilities. With NBS, we
are able to bring the service and expertise needed to address these complex
legacy plan asset requirements.”

Complexities for sponsors of 403(b) plans with legacy assets
include Form 5500, small amount payments, qualified domestic relations orders,
beneficiary designations and death claims. These are in addition to
complexities with loans and hardship distributions.

“The Department of Labor and Internal Revenue Service have
focused on educating 403(b) plans about the rules and have not yet embarked on
rigorous enforcement. However, we believe the agencies will begin actively
enforcing the regulations in the near future,” says Friedman. “Financial
professionals can take the concern off the table for 403(b) sponsors by helping
them with the complexities surrounding legacy assets.”

The new strategy from The Principal and NBS can help
financial professionals:

Reduce time and effort for the plan sponsor;

Ensure completeness and timeliness of plan
administration and compliance; and

Provide assurance of a responsibly run plan for a plan with legacy assets.